Davos 2018: What is the World Economic Forum and why is Donald Trump speaking?

What is the purpose of this annual elite get-together in the Swiss mountains?  What actually goes on there? Does it really do any good? And what is the US President likely to say?

Ben Chu
Economics Editor
Monday 22 January 2018 14:28 GMT
The World Economic Forum at Davos: what is it, who attends, why is it important?

Some of the richest and most powerful people in the world are currently travelling to the World Economic Forum, which officially begins on Tuesday in Davos.

But what is the purpose of this annual elite get-together in the snow-bound Swiss mountains? What actually goes on there? Does it really do any good? And what on earth will Donald Trump say?

What is Davos?

It began as a small conference on management in 1971. The founder, Klaus Schwab, had the modest goal of introducing American management techniques to underperforming European firms.

But Davos has exploded since those humble beginnings into a sprawling annual gathering of around 3,000 of the world’s elites from the worlds of business, finance, politics and public affairs.

The WEF describes its official mission as “improving the state of the world”.

The official World Economic Forum (WEF) is held in a conference centre in the heart of the small Swiss ski resort of Davos, where delegates listen to speeches, panel discussions and take part in seminars.

But there is also a large unofficial and informal event that takes place around the WEF in the resort’s various luxury hotels, principally the Steigenberger Belvedere, and various bars where elites are joined by hordes of lobbyists, public relations supremos and journalists.

Who goes there?

The world’s most powerful politicians. This year the WEF hosts, among many others, Emmanuel Macron, Angela Merkel, Theresa May, Justin Trudeau, Benjamin Netanyahu, Mauricio Macri Emmerson Mnangagwa and Narendra Modi.

Traditionally, American presidents don’t attend, but this year Donald Trump has, surprisingly, decided to jet in, despite winning the US election on a ticket reviling the kind of corrosive “globalism” that Davos allegedly represents. Analysts expect Trump to outline his customary “America First” theme, and perhaps to try and make the rest of the delegates uncomfortable, with a view to pleasing his domestic political base.

Many of the heads of the world’s largest companies will also, as usual, be in attendance, this year including (again among countless others) Marc Benioff of Salesforce, Carlos Ghosn of Renault-Nissan-Mitsubishi and Sir Martin Sorrell of WPP. It is these business delegates who mostly pay for the conference, with annual corporate membership and partnerships fees ranging between 60,000 and 600,000 Swiss francs (£45,000 to £450,000).

Senior leaders of bodies such as the International Monetary Fund and the United Nations also attend, as do the bosses of national central banks, such as Mark Carney of the Bank of England.

The WEF also invites heads of charities, trade unions, academics and non-governmental organisations, in order to counter the accusation that Davos is simply about plutocratic elites talking to other elites.

Every year a smattering of celebrities from the world of entertainment are also invited by the WEF, guaranteeing some glamour for the media. This year Cate Blanchett and Elton John will be attending. In 2016 one of the celebrity guests of honour was Kevin Spacey.

What happens there?

A great deal of earnest discussion on recurrent themes such as inequality, poverty, innovation, technological change, the environment, and corporate social responsibility. The official “theme” of this year’s meeting is: “Creating a shared future in a fractured world”.

But the reality is that many CEOs are not there for talks on “inclusivity” or “mindfulness” but because it is a golden networking opportunity. A great deal of that networking takes place in private meeting rooms in the main conference centre and in parties and hotel rooms of the luxury hotels in the resort.

Ego is another incentive. Some of the less-secure executives feel it is important to be seen at the resort every year since it underlines their status.

Some politicians come for ego-related reasons, but also because it is an opportunity to make pitches for inward investment to an unrivalled concentration of private sector players from around the world. It’s also a chance for leaders to try to transmit their preferred message across to the global media, which always descends on Davos in force.

Geopolitical deals have also, on occasion, actually been forged up there in the mountains, most notably when Greece and Turkey signed a “Davos Declaration” in 1998, which helped the two states avoid war.

Does it do any good?

To its advocates, the WEF, while it doesn’t save the world, helps influential and intelligent people of good intent devise solutions to the world’s intractable social, economic and political problems.

To its more vehement critics, like Trump’s former chief strategist Steve Bannon, Davos represents a kind of nefarious elite conspiracy against the world’s powerless.

Some take a less extreme, albeit still cynical view, arguing that Davos essentially produces lots of hot air and hypocritical virtue-signalling from the planet’s most privileged individuals.

A scathing verdict on Davos’s corporate attendees from one of the foremost scholars of economic inequality, Branko Milanovic, has caught the attention of many this year: “It is cheaper to place a sticker about fair trade than to give up the use of zero-hour contracts. They are loath to pay a living wage, but they will fund a philharmonic orchestra. They will ban unions, but they will organise a workshop on transparency in government.”

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